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Supersonic Economics
Las Vegas is undergoing fundamental changes on virtually every level.
In April alone, five major announcements have energized the community's
mushrooming growth.
The NBA is actually considering playing its All-Star game
here in February 2007. The university of Pittsburg Medical Center has
proposed a joint venture to found a Las Vegas academic medical center in
partnership with the Nevada School of Medicine.
A new 24,000 unit urban village has been announced for the
south end of the "Strip." The first major High Rise timeshare development
(800 units) in more than a decade is being added to the Aladdin. The first
new "loft" project in north downtown was announced, with 60 units.
And that's just in April!
The economic rocket ship that is Las Vegas is shooting for
the stars again. Wynn Las Vegas is now open so buckle up your seatbelts.
2005 will be a fast, fabulous ride, no matter what happens to the American
economy as a whole.
The best way to assess these supersonic economics is to
review the long and short term. Las Vegas INFO-SOURCE sees a myriad of
opportunities ahead. Here's why:
-
JOBS: Job growth in 2004 exceeded 4.9% - the best in
the nation. It should top 4.4% in 2005.
-
GROWTH: The budget shortfall anticipated in Carson
City last summer has been all but wiped out with a $300 million surplus of
sales tax revenue.
-
TOURISM: Las Vegas broke all tourism records in 2004
and over the first two months of 2005 is on track to break the 2004 record.
- REAL ESTATE: Residential sales and prices shattered
records last year. New home sales are on record pace in the first
quarter and prices in both the new and resale sectors are strengthening.
Plus Vertical and new urban living have now taken a firm hold in the Real
Estate market and promise to change the future of real estate.
Here are the details:
ECONOMIC IMPACTS:
Wynn Las Vegas opened. That means 8,000 new jobs
for Las Vegas.
The Yucca Mountain project has crashed into a mountain of
questionable emails and falsified documentation. While the most recent
revelations do not necessarily mean an end to a project many believe to be an
economic stupidity, they certainly add delay.
The World Market Center - The furniture market which opens
its first 1.3 million square foot building here in July - has announced its
planned expansion to 12 million square feet of planned and temporary showrooms.
That's 500,000 square feet more than High Point, North Carolina - currently the
largest. That also doubles the project's cost from $1 to $2 billion,
creating eight buildings on its 57 acre site to be completed in 2015.
In 2004, 38 California companies relocated or expanded to
Nevada. Unfortunately, Arnold, those 1,500 jobs won't be back.
The downtown area of Las Vegas is taking shape. The
Related Companies have hit all of the milestones of their 120 day agreement.
"Union Park" will contain 30 buildings ranging from two to 50 stories, with a
total of 8 million square feet. The multi-million dollar effort will
include a performing arts center, new city hall, an academic medical campus,
3,000 high-rise residential units and up to 1.5 million square feet of office
and retail space.
How fast is that moving? The University of Pittsburgh
has proposed a joint venture for a state-of-the-art academic medical center at
Union Park, the city-owned, 61 acre parcel downtown. The joint venture
with the Nevada School of Medicine does not yet have funding, but a $600,000
study funded by Cleveland Clinic and the City of Las Vegas found that such a
facility would be profitable within two years. The University of
Pittsburgh Medical Center is the world leader in organ transplants and
recognized by U.S. News & World Report as a top hospital nationally in 12
specialty areas.
What happens in Vegas stays in Vegas? The Nevada
Brother Association wants their clients to be taxed. They figure to add
$2-3 million per year to the State's coffers. Wonder if lawmakers will lie
down on this one?
Nevada gaming won $909.5 million in February - a 3.77%
increase over last year. That is the best February gaming win in history.
The Strip casinos energized the win with $426.7 million, 4% over last year.
Clark County win was up 4.7% to $766 million.
Gaming's "Big Six" are expected to report a record first
quarter later this week. One authority says profits should hit the $466
million mark - a 61% gain over last year's first quarter. The big six
currently include Boyd Gaming, Caesars Entertainment, Harrah's, Mandalay Resort
Group, MGM Mirage and Stations. The Big Six companies' revenue jumped 10%
to $5.2 billion in the first quarter.
Construction on a new VA Hospital will begin in North Las
Vegas in 2006.
CDW Corporation, a Fortune 500 computer products firm, will
open a 513,240 square foot warehouse and Tech center in North Las Vegas by the
end of this year.
The US Census Bureau ranked Las Vegas 24th out of 68 large
cities surveyed in average workday commute. In 2003, the latest year for
which figures are available, the time was 24.36 minutes.
TOURISM:
Wynn Las Vegas opened. It is being touted as the
next iteration of Las Vegas hostelry, more luxurious than Bellagio.
This is the first of three major new hotels to hit the strip
over the next three years. Look for La Posada, near the Venetian, to open
summer, 2007. And, Archeon's property (3,200 rooms) on the site of Wet 'n
Wild is set to open sometime in 2008. But, don't forget South Coast, which
will open in December, the Green Valley Ranch expansion which opens in June, and
the Sante Fe Station remodel which opened in March.
Although final figures aren't in, the LVCA estimates 5.7
million people attended conventions in Las Vegas last year. In 2003, the
Travel Industry Association named Las Vegas the number 2 city for conventions
and meetings behind Chicago.
The NBA has announced it will consider Las Vegas as the first
city without an NBA franchise to host the All-Star game. Discussions focus
on February 2007. One condition set by the NBA - no betting is allowed on
the game by local casinos.
Celebrating tax day, McCarran International Airport, now the
sixth busiest airport in the nation, opened the northeast wing of the D-gates
concourse. Last year's record 41.4 million passengers can be increased by
3.1 million this year as the number of existing gates increase to 92 from 85.
McCarran also plans to build a 10 gate northwest wing
addition to the D-gates, as well as a 14 gate Terminal 3 project on Russell
Road. Ultimately, the airport will contain 120 gates and be able to handle
well over 55 million passengers. In January, airport traffic counts pushed
over 3.3 million, a 9.8% increase over last year.
A new comedy festival hits the Strip in November - including
more than 50 performances, events and film screenings at Caesars Palace and The
Flamingo. It takes place during the week once devoted to Comdex. HBO
is producing.
The Las Vegas Speedway Commerce Center is scheduled for a $45
million, 500,000 square foot expansion.
RETAIL
When you think tourism, normally you think gaming.
But, start thinking retail.
Statistics from the Las Vegas Convention and Visitor's
Authority show last year's nearly 37.4 million visitors spent an average of
$124.39 (per trip) on shopping-related purchases. That's up 27% from 2003!
A 26,000 square foot block - formerly the Trolley Stop near
the Fremont Street Experience - is being transformed into a hot spot for
entertainment, restaurants, clubs, retail and more.
The Showcase Mall on the Strip (Coke bottle, M&M package
exterior) will be expanded 85,000 feet above its current 190,000 square feet.
The expansion will include 80 to 100 for-sale condominiums built on top of the
new retail structure.
A 2 million square foot enclosed "super" regional mall will
be built by Triple 5 Nevada in the Northwest. The scheduled completion
date has been moved forward by one year to 2007. The mall would compete
with other large-scale retail projects planned for the valley, including a
Summerlin mall by Rouse Co., the Town Center joint venture between Centra
Properties and Turnberry Associates on Las Vegas Boulevard South and a 125 acre
mixed use residential and retail development by Olympia Group and Simon Property
Group farther south on Las Vegas Boulevard.
In fact, four of the five largest enclosed malls in Las Vegas
are not yet built. Triple 5's Great Mall of Las Vegas, Summerlin Centre,
Town Square and Southern Highlands Center, all over 1 million square feet, are
not yet built. Only the Fashion Show's 1.9 million square feet has been
completed.
REAL ESTATE
The first new High Rise to close units will be
Metropolis, this summer.
Carina Homes broke ground on a $100 million mixed use project
on 41 acres at Farm and Tule Springs. The Village at Centennial Springs
combines single and multifamily residences with office, retail, restaurants and
recreational amenities.
New York's Dezer Development has purchased 9 acres of land on
Industrial Road, just south of Tropicana, and plans to build three to four condo
towers, which could cost up to $1 billion.
Centra, in concert with The Related Companies is putting $2
billion into a 25 acre mixed use project on the northwest corner of Harmon and
Paradise. It calls for eight 400 foot tall towers, housing 3,000 condos,
plus 1-2 boutique hotels. Specialty retail and condo-tels are under
consideration. The as yet unnamed project breaks ground in 2006.
The palms Casino Resort is adding a $600 million expansion,
including a new 520 unit condominium hotel and spa. Construction begins in
2006.
The 165,000 square foot Shadow Mountain Business Center on
9.5 acres at Alexander and Pecos is scheduled to open in the fourth quarter.
Vacant land sales prices increased 149% in 2004 reports
Applied Analysis. Property sales averaged $520,448 or $11.95 per square
foot in the fourth quarter. The largest private land auction in Nevada
history, more than 250,000 acres, will take place May 4 at Cox Pavilion by
Sperry Van Ness Transwestern.
Plans for three 15 story condominium and retail towers to be
built just outside Henderson city limits are approved. The project
proposes 59,000 square feet of retail space, an 11,200 square foot health club
and 316 condominium units.
Apartment vacancies dropped to 4.37% in January, says CB
Richard Ellis.
All information is as reported at the Crystal Ball Spring 2005 conference.
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